Self-employed: How do you manage your finances?

With rising costs and increased learning needs, financing our children's education is no longer a simple walk in the park. Discuss with other parents about how they are managing their finances to cope with their expenses.

Self-employed: How do you manage your finances?

Postby Rejoin » Thu Dec 18, 2014 6:11 am

The following post express my views (and my views only). It's not meant to advise or counsel people.

I'm a self-employed tutor in my early 30s. I have to be extra careful with my finances since I do not get employer contribution to my CPF, or the benefits of a secured job (i.e. like school teachers or some permanent employee).

The following is how I handle my finances, in decreasing order of priority.

1. Health insurance/Hospitalization plans.
- I look through all the 5 major insurance companies and buy a private medical insurance (plan A). All plan A schemes are comparable to one another. I chose Great Eastern Life. I also purchased a full-rider.

2. Life insurance.
- This is for the benefit of my loved ones, should I pass away (young). When I'm old, this is for the benefit of my family and children. My total coverage is more than 300k (which is not a lot by today's standards).

3. Critical illness/Term insurance.
- I bought a CI plan, for some medium term coverage.

4. Contribution to CPF
- I contribute to my OA, SA and Medisave account on a monthly basis.

5. Retirement planning.
- I have plans with various insurance companies for retirement plans.

6. Stock investing/Fixed deposits/Liquid Cash.
- I invest some of my liquid cash into short-term fixed deposits, or stocks. For high liquidity, I recommend OCBC360, as well as the current various promotions offered by UOB, POSB (up to 1.5% interest p.a.).

As for how much I spend on them.
1. About 800/year.
2. Approximately 10% of my yearly income.
3. Approximately 5% of my yearly income.
4. Approximately 10% of my yearly income.
5. Approximately 10% of my yearly income.
6. The rest of my liquid cash, and available resources after expenditure.

My belief in a financial planning is that you need a pyramid-like structure. The base of the pyramid has to be the very safe products (i.e. savings plans, retirement plans). The top of the pyramid is slightly-risky products with your liquid cash. These are the funds you can afford to lose.

Rejoin
OrangeBelt
OrangeBelt
 
Posts: 56
Joined: Tue Oct 09, 2012 9:59 am
Total Likes: 1


Re: Self-employed: How do you manage your finances?

Postby zbear » Thu Dec 18, 2014 9:55 am

Thanks for sharing. OT - I am just being curious. Why do you choose to be a full time tutor?

Pls share if you don't mind me asking.

zbear
KiasuGrandMaster
KiasuGrandMaster
 
Posts: 4988
Joined: Mon Sep 16, 2013 1:14 pm
Total Likes: 64


Re: Self-employed: How do you manage your finances?

Postby Rejoin » Fri Dec 19, 2014 6:29 am

zbear wrote:Thanks for sharing. OT - I am just being curious. Why do you choose to be a full time tutor?

Pls share if you don't mind me asking.


I tried out part time teaching 2 years. I get a sense of satisfaction for every student that I have taught and helped him/her to improve. Consequently, I went into full time tutoring.

Rejoin
OrangeBelt
OrangeBelt
 
Posts: 56
Joined: Tue Oct 09, 2012 9:59 am
Total Likes: 1


Re: Self-employed: How do you manage your finances?

Postby raymondtkleong » Wed Jan 07, 2015 12:52 am

Thanks for sharing. Great that you've taken very good steps in your personal finance planning.

If you don't mind, I would share a few of my thoughts here:

1. Personally, I never mix insurance with investment. They are totally different things. Of course, many _use_ insurance as saving/investment purpose. That's fine if you know what you're doing & that fit your plan/strategy.

2. Critical Illness and Term Insurance are two different things. You have purchased CI, which is great. Term insurance, on the other hand, is the cheapest form of life insurance. Like what you stated, $300K for Life Insurance (I assumed is Whole Life plan that cover for life) is not enough. You can top it up with Term Insurance to have more coverage, but the limitation is only for certain tenure, so remember to get the renewable rider.

3. For Health Insurance, are you referring to Integrated MediShield Plan that provided by private insurers, and can be paid of using MediSave (except rider)?

Just my 2 cents.

Note that I am not insurance agent or financial advisor. I just quite into personal finance thingy, like you. ;-)

raymondtkleong
YellowBelt
YellowBelt
 
Posts: 13
Joined: Fri Nov 02, 2012 4:45 pm
Total Likes: 0


Re: Self-employed: How do you manage your finances?

Postby Rejoin » Tue Feb 10, 2015 7:08 am

You are right. They are different things.

Term insurance has no value at the end of it, whereas CI *might* have (depending on the plan you purchase).

Yes, for health insurance, I am referring to integrated Medishield plan.

Rejoin
OrangeBelt
OrangeBelt
 
Posts: 56
Joined: Tue Oct 09, 2012 9:59 am
Total Likes: 1



Re: Self-employed: How do you manage your finances?

Postby starlight1968sg » Sat Feb 14, 2015 4:09 pm

Rejoin wrote:Term insurance has no value at the end of it, whereas CI *might* have (depending on the plan you purchase).

Yes, for health insurance, I am referring to integrated Medishield plan.

Examples of term insurance: travel insurance.
Aviva offers some term insurance to S* personnel.
I consider our MediShield and soon MediShield Life, and the Integrated Shield Plan, as term insurance too.

starlight1968sg
KiasuGrandMaster
KiasuGrandMaster
 
Posts: 10119
Joined: Mon Nov 16, 2009 8:43 am
Total Likes: 23


Re: Self-employed: How do you manage your finances?

Postby Mdm Koh » Sun Feb 15, 2015 10:08 am

Thanks for your sharing. I never mix health insurance with investments too as I need my investments to be flexible in case of emergencies. I find that many of the investment-linked insurance plans aren't flexi, such that if one wishes to stop his or her investments, it would affect the other components of the insurance. In addition, as I travelled around a lot, I also purchased an accident plan.

Mdm Koh
BrownBelt
BrownBelt
 
Posts: 539
Joined: Mon Jul 25, 2011 2:04 am
Total Likes: 4


Re: Self-employed: How do you manage your finances?

Postby scang » Fri Mar 13, 2015 1:51 am

Rejoin wrote:You are right. They are different things.

Term insurance has no value at the end of it, whereas CI *might* have (depending on the plan you purchase).

Yes, for health insurance, I am referring to integrated Medishield plan.


Actually, there are 2 insurance companies that offer term insurance that "almost guarantee" you will be profitable when you eventually die, as they cover up to 99 years old (which 99% of people do not live past that age).

Entry age at 25 years for $2.5k premium = $187.5k total premium paid for lifetime, and payout of $1M, so best term insurance for ROI.

Last entry age to be "profitable" is about 50 or early 50+ years old as premium is higher for older ages for the same payout of $1M.

This is probably good for those who are savvy in investing, as they will buy term and invest on their own to get better return than Whole life insurance which gives pretty low returns.

scang
BlackBelt
BlackBelt
 
Posts: 793
Joined: Sun Sep 12, 2010 5:48 pm
Total Likes: 6


Re: Self-employed: How do you manage your finances?

Postby nerov » Fri Mar 13, 2015 6:39 am

So which two insurance companies are those?

scang wrote:
Rejoin wrote:You are right. They are different things.

Term insurance has no value at the end of it, whereas CI *might* have (depending on the plan you purchase).

Yes, for health insurance, I am referring to integrated Medishield plan.


Actually, there are 2 insurance companies that offer term insurance that "almost guarantee" you will be profitable when you eventually die, as they cover up to 99 years old (which 99% of people do not live past that age).

Entry age at 25 years for $2.5k premium = $187.5k total premium paid for lifetime, and payout of $1M, so best term insurance for ROI.

Last entry age to be "profitable" is about 50 or early 50+ years old as premium is higher for older ages for the same payout of $1M.

This is probably good for those who are savvy in investing, as they will buy term and invest on their own to get better return than Whole life insurance which gives pretty low returns.

nerov
OrangeBelt
OrangeBelt
 
Posts: 75
Joined: Wed Jan 06, 2010 2:19 pm
Total Likes: 0


Re: Self-employed: How do you manage your finances?

Postby ngl2010 » Fri Mar 13, 2015 9:25 am

I am interested to know which 2 insurance companies too.

ngl2010
KiasuGrandMaster
KiasuGrandMaster
 
Posts: 6029
Joined: Tue May 24, 2011 2:03 pm
Total Likes: 68


Next

Return to Money Matters